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Elliott Wave Theory: Diagonal Waves

Adam Lienhard

We talked earlier about impulse waves. Today we will talk about the second type of waves, which is diagonal waves.

What is a diagonal wave?

A diagonal wave is a special type of motive wave that closely resembles the motive impulse wave explained in several rules, except for the rule of alternation. 

Sometimes, diagonal waves occur in a way that starts with a converging triangle and then expands. This is called an extended diagonal wave.

We can make the following observations about diagonal waves:

  • There is a strong overlap between wave 4 and wave 1. There is an important phenomenon called triangulation, or more precisely, non-parallelism. In the motive impulse wave, we mentioned that if we draw a line connecting waves 1 and 3, and another line connecting waves 2 and 4, they would be parallel. However, in diagonal waves, these lines are non-parallel and can intersect in a triangular shape.
  • The occurrence of these waves is an indication of an upcoming reversal and a potential trend change.

General rules for diagonal waves

  1. Overlap of wave 4 with wave 1.
  2. Wave 1 is the longest, followed by wave 3, and then wave 5 (with the consideration that wave 3 cannot be the shortest).
  3. Wave 4 cannot exceed the starting point or the length of wave 3.
  4. The phenomenon of alternation will be explained later with corrective waves.

Types of diagonal waves

Leading diagonals sometimes occur at the beginning of motive waves in wave 1 and require 5 waves to complete. The structure of leading diagonals is as follows:

  • Wave 1: 5 waves
  • Wave 2: 3 waves
  • Wave 3: 5 waves
  • Wave 4: 3 waves
  • Wave 5: 5 waves

Ending diagonals occur at the end of motive waves, specifically in wave 5. This is why they are called “ending” diagonals as they occur at the end of a wave, while leading diagonals occur at the beginning. Ending diagonals are similar to leading diagonals except for the composition of their internal waves. All the waves in an ending diagonal are three-wave structures, which makes them easier to identify.

General characteristics of diagonal waves

  • Wave 1 can form any pattern except triangles.
  • Wave 2 can form any pattern and cannot decline below the start of wave 1. It often moves in the opposite direction.
  • Wave 3 can form any pattern except triangles and must be longer than wave 2.
  • Wave 4 can form any shape and is often a sideways correction.
  • Wave 5 can form any shape and must retrace at least 38.2% of wave 4. It should be shorter than waves 1 and 3.

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